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Moving in Together--Buying a House Before Marriage

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Buying a home is a big step--especially when you enter into this significant financial investment with another person. If you and your partner aren't married, things can get even more complicated.

If you are considering buying your first home with your partner without a wedding, be sure to take the proper steps to protect yourself and your investment before you proceed.

Compare credit

Your credit score is one of the most important factors to consider when applying for a loan. If you and your partner are thinking about buying a home together, a discussion about your credit scores is certainly crucial. If one of you has a poor score, you may be unable to obtain a loan or receive a high interest rate. While you may want both your names on the deed, if one of you has significantly better credit, it may be a better idea for that person to purchase the home alone. However, it is also important to consider that you may receive a smaller loan if it is based on just one income.

Get a joint account

If you don't already have a joint bank account, setting one up will make managing your costs much easier. You can each transfer funds from your personal accounts to cover your shares of the mortgage payments, property taxes, and utility bills each month, so neither party has to be financially responsible for handling expenses.

Put it in writing

Since you two aren't married, you will need a written agreement stating the conditions of your arrangement to protect you both in case things don't work out. Hire a real estate lawyer to prepare a property, partnership, or cohabitation agreement that details the specifics--such as the percentage of the home’s equity each partner is entitled to and what will happen to the property if you split. Will one of you move out? Will you sell the home and split the profit? Who's name will be on the deed? Are you both contributing even amounts for the down payment? All specifics of your arrangement should be clearly outlined.

Determine the title

Titling the home is important because it signifies legal ownership. When purchasing a home with your partner, you have three options for the title--one of you holds the title as the sole owner, both of you can hold the title as “joint tenants,” or you can share the title as “tenants in common.” You should ideally both be on the title, since putting the home in just one name leaves the other partner without equity in the investment.

If you sign the title as tenants in common, each of you will own specific percentage of the property, which will be illustrated in the deed. However, if one of you dies, ownership of the home is not automatically transferred to the surviving owner--he or she will need to be named an heir in the deceased partner's will. If you are listed as joint tenants on the title, you are both considered equal homeowners and should one of you die, the other would inherit the entire home and property automatically.

Nicole La Capria  Posted by Nicole La Capria on February 16, 2016

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